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Reply #42: Nope. Because the SS trust fund BY LAW is EXCLUDED from all budgets: [View All]

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stopbush Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-12-10 05:55 PM
Response to Reply #38
42. Nope. Because the SS trust fund BY LAW is EXCLUDED from all budgets:
Edited on Sun Dec-12-10 06:26 PM by stopbush
EXCLUSION OF SOCIAL SECURITY FROM ALL BUDGETS Pub. L. 101-508, title XIII, Sec. 13301(a), Nov. 5, 1990, 104Stat. 1388-623, provided that: Notwithstanding any other provision of law, the receipts and disbursements of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund shall not be counted as new budget authority, outlays, receipts, or deficit or surplus for purposes of - (1) the budget of the United States Government as submitted by the President, (2) the congressional budget, or (3) the Balanced Budget and Emergency Deficit Control Act of 1985.

Here is the real problem in a nutshell:

the Republican call for tax cuts has had the effect of depleting the GENERAL FUND of the USA. This is the fund that pays for the military, etc. The tax cuts given to EVERYBODY over the years mean there is less $ in the general fund.

SS runs a SURPLUS. BY LAW, any surplus run by SS in a given year is invested in government securities. It's like SS is using their surplus to buy US Treasury bonds just like you or I can.

The money is taken out of SS and put in the general fund, and SS is in effect issued an IOU, ie: a government security, by the US Gov on behalf of the general fund.

Because SS is overfunded, politicians know that they can cut taxes and create shortfalls in the General Fund because the general fund will BY LAW be borrowing money from SS and issuing securities as collateral. Ergo, they can cut taxes and deprive the general fund knowing those cuts will be pasted over with SS funds.

THAT is the real problem - cutting the tax revenues flowing into the general fund.

There are a couple of solutions:

1. Place SS in a lock box. That would end the Government being able to borrow from the SSTF to fund the general fund. It would mean that they would need to raise taxes dramatically to fund the general fund, OR they would need to cut spending dramatically. It would mean much greater honesty in the tax system about how we fund our government.

2. Grow the economy to the point where enough revenue is coming into the general fund to meet obligations. At that point - as it was under Clinton - money being transferred from SS to the General Fund would create a surplus that could be used to pay down the debt.

3. A combination of the two, with maybe only a portion of SS funds placed in the lock box.
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